Banks object to consumer bureau data-sharing rule

By CARTER DOUGHERTY, BLOOMBERG NEWS

Published 10:55 pm, Friday, October 7, 2011

Photo: Andrew Harrer

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Roy Cooper, attorney general of North Carolina, speaks at a news conference during the National Association of Attorneys General spring meeting in Washington, D.C., U.S., on Monday, March 7, 2011. Settlement talks between states, federal officials and banks over mortgage-servicing and foreclosure practices also involves mortgage investors, Iowa Attorney General Tom Miller said. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Roy Cooper less

Roy Cooper, attorney general of North Carolina, speaks at a news conference during the National Association of Attorneys General spring meeting in Washington, D.C., U.S., on Monday, March 7, 2011. Settlement ... more

Photo: Andrew Harrer

Banks object to consumer bureau data-sharing rule

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WASHINGTON - Banks are pushing the Consumer Financial Protection Bureau to limit information-sharing with states out of concern that attorneys general could file lawsuits based on private data collected by the agency's examiners.

The dispute, part of the financial industry's efforts to limit the reach of the Dodd-Frank overhaul of rules for Wall Street, revolves around a regulation on disclosure of records and information that the agency issued on July 21, its first official day of work. The rule said sharing some confidential data with states may "serve the public interest."

Fischer said that the banks' concerns center on the confidential nature of the examination process. For example, he said, if the bureau's bank examiners found potential violations of federal consumer law, they might write a report directing the company's board to make changes and redress wrongs, all out of the public eye.

If the bureau alerted attorneys general, however, states could file lawsuits or subpoena the data, Fischer said.

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Supporters of the bureau's policy said the regulation is only fleshing out the mandate of Dodd-Frank for closer ties between federal and state officials on consumer finance.

"There is no indication that the CFPB will act irresponsibly in what they share with attorneys general," James Tierney, a former Maine attorney general who is director of the National State Attorneys General Program at Columbia University. "Statements to the contrary are no more than saber-rattling in order to frighten clients and markets."

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ROY COOPER N. Carolina attorney general says states will accept the rule.

Tierney said that now that Dodd-Frank is being implemented, banks are "trying to reverse the law in practice" under the guise of preserving the integrity of the supervisory process.

Roy Cooper, the attorney general of North Carolina, said that part of the bureau's new rule includes requirements that the states keep whatever data they get confidential.

"So if the bureau chooses to share information with states, we have to accept those rules," he said.

Cooper, who ended a stint as chairman of the National Association of Attorneys general in June, said that while the organization wants to protect consumers, it "has never maintained that state attorneys general have a role in supervisory issues." He added that figuring out the exact information the bureau would share "is still a work in progress."